Try to update every damn driver and install XP service pack 1.
(in reverse order: SP1 first)
Can't think of anything else.

By the way, upgrading to GF4 is not that good idea.
In my opinion it would be waste of money, all those neat features that GF4 offers, are not of any use right now. The best GF4 is 4200 but it's performance is not too far away from GF3Ti500 howewer.
And, GF4's have some incompatibilities with FreeSpace 2, that's another reason not to upgrade yet...
By the way, turn off full-scene anti-aliasing off (FSAA) completely when playing FS2, it causes in-game text to become almost unreadable.